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Muddy Water's latest short

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  1. #1

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    Muddy Water's latest short

    Carson Block alleges that most of the company's clients are fake bots.


    https://www.scmp.com/business/compan...nline-students



    https://finance.yahoo.com/news/carso...195811279.html

    AsianXpat0 likes this.

  2. #2

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    If they have trained bots to learn on the internet, you would think they could make a business out of selling that!!


  3. #3

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    Despite the fact that many China companies are listed on US exchanges, they do not adhere to Sarbanes-Oxley Act accounting rules, a source of ongoing frustration for the Public Company Accounting Oversight Board (PCAOB) and SEC chairman Jay Clayton.

    https://www.regulationasia.com/chine...-stock-market/

  4. #4

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    Quote Original Post:
    Carson Block alleges that most of the company's clients are fake bots.


    https://www.scmp.com/business/compan...nline-students



    https://finance.yahoo.com/news/carso...195811279.html
    Will you join him in shorting the firm?

    I went through the report and what Muddy Waters alleges is a pretty standard fake it until you make it scheme. According to the interview they used bots to make online teachers feel they were teaching to a large audience and kept it rolling from there. Credit Suisse seems to be the sucker in this.

    I think whether it is successful depends on how much of the float is GSX own shareholders and how much is actually other investors. This type of fake stuff is pretty prevalent even in Hong Kong (paying for revenues) but share prices don't fall to $0 because there's very little of the float actually owned by an outsider so no one needs to get out of the trade. The purpose of having these companies is for the key shareholder to borrow a ton of money from a large bank and use that for other investments - hence why I think Credit Suisse could be the biggest loser.

    I have heard about those bot farm things mentioned in the report so I do believe them to be real. The bot farm thing in China is really popular for Instagram/Twitter celebrities as when they first start out they don't have any interest from people so they buy likes/retweets/whatever metric and then, surprisingly, people really do follow and pay money for their services. My sister in law did this to sell stone jewelry Feng Shui stuff.
    AsianXpat0, Coolboy, jrkob and 1 others like this.

  5. #5

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    Quote Original Post:
    Will you join him in shorting the firm?
    I don't short stocks.
    But after Sino-Forest (I had the bonds) I believe that PRC firms will fake anything. They faked trees and I don't think faking online students is very hard.
    RMDNC, shri, TheBrit and 1 others like this.

  6. #6

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    @Viktri - click farms / bot farms etc.. In the old days they used this sort of setup. These days they just have larger servers that run hundreds and thousands of fake browser sessions.

    https://kotaku.com/inside-chinese-cl...rms-1795287821

    jrkob and Viktri like this.

  7. #7

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    Quote Original Post:
    I don't short stocks.
    But after Sino-Forest (I had the bonds) I believe that PRC firms will fake anything. They faked trees and I don't think faking online students is very hard.
    It must be easier than faking cappuccinos.
    TheRoadAhead likes this.

  8. #8

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  9. #9

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    VIE and accounting/ auditing process oversight in and of themselves are troubling enough IMO. Investors buying a China growth story yet management of many of those company's could not give a rats ass about shareholders except how they are able to leverage that into personal wealth. The CEO and COO of LK IMO really should be hung from a tree if there were no laws against vigilante justice.

    Last edited by RMDNC; 19-05-2020 at 10:59 PM.

  10. #10